SEC to Fund Providers: Speak English

November 15, 2007 (PLANSPONSOR.com) - Federal
securities regulators have given preliminary approval to plan
to make prospectuses easier to understand and general improve
mutual fund disclosures.

Commissioners of the U.S. Securities and Exchange
Commission (SEC) voted 4-0 in favor of the proposal to
require funds to provide a summary prospectus with key
information in plain English, in a clear and concise
format, and to distribute more information online,
Reuters reported.

The proposal would mandate the inclusion in a
prospectus of items such as risk and return, the fund's
investment objectives, costs, and a brief summary of its
top 10 portfolio holdings along with a discussion of
potential tax consequences of investing in that fund,
according to the news report.

Investors would be able to choose how they would
like to receive the summary -- on paper or online.

"This proposal is a giant step forward for
investors," SEC Chairman Christopher Cox said at a
commission meeting, according to Reuters.

According to the news report, Commissioner Paul
Atkins was supportive of the overall plan but expressed
reservations about the cost for funds to change their
prospectuses to include the summary. He also questioned
whether the top 10 holdings was key information. "There
is always the possibility that there is some element of
window dressing by funds," Atkins said.

The SEC already is taking steps to simplify the
submission of financial information from mutual
funds. Earlier this year, the agency voted to
let funds join a pilot program and submit their
financial data in a new, machine-readable computer
language known as XBRL (See
SEC Offers Quicker
Report Reviews to Interactive Data Testers
).

Washington attorney Jamey Delaplane, who
specializes in Employee Retirement Income Security Act
(ERISA) issues, told a recent Webinar co-sponsored by
the Women's Pension Exchange and PLANSPONSOR
that the U.S. Department of Labor is likely
to use the SEC proposed disclosure form as a regulatory
template for other required participant
disclosures (See
Retirement Plan
Discussion Likely to Continue Past 2008 Elections
).